Posted by LeonNC on February 20, 2001 at 08:43:46:
Jim,
You’re exactly right and when discussing the new policy with my agent, how it was going to be named didn’t even cross my mind…dah. I called the insurance agent the second I read your post.
The policy was written with the trustee as the loss payee and they named me as beneficiary. I told them I didn’t want my name on it but to be written as you stated “and the beneficiaries as thier interests may appear.” They are going to call me back they said they don’t know if they can do it. I’ll let you know.
Posted by LeonNC on February 19, 2001 at 12:51:28:
Today I CLOSED on my first subject-to deal. I bought the house with the intention of refinancing the loan because the current interest rate and payment are too high but there’s good equity in the deal and will cashflow good when I refinance.
At the closing I had a letter for the seller to sign to send to the insurance agency to adjust the policy as needed. My attorney/deal killer wanted to call the insurer to get the policy squared away before we closed. While talking with the insurance agent he told them the property was being SOLD. The agent said they could not insure the property without the seller being the loss payee.
We ended up cancelling the current policy and me getting a new one with my agent. So, it looks like I’m going to be dealing with the lender.
The house needs about $2500 in repairs. Should I go ahead and do the repairs and get the refinancing process started or wait to see what the lender says if anything?
Is there a way to salvage the insurance situation?
How can I avoid this in the future? I asked my insurance agent if they would insure me without the lender and they had no problem which means I could have left the existing policy in place. But, my insurance agent also said it is a legal mess with two policies in place if something happens to the house.
I’m hoping I can just tell the lender the situation and they’ll let me do what I need to. Not exactly the situation I’d like to be in but it’s where I’m at.
Also my attorney insisted on having in the deed language that is the same as if I were assuming a loan something like I’m promissing the seller I’ll make the payments. Should this be left out in the future or is this normal?
Re: Insurance cluster F#%! (Long) - Posted by JPiper
Posted by JPiper on February 19, 2001 at 16:08:53:
Leon:
First, just a general rule of thumb. Do not allow others to control your deal. In this case, the attorney doesn?t make a call to the insurance agent. Every time you let loose of a detail in your deal, that detail then becomes a possible problem somewhere down the road. And that?s the lesson here.
Now, your current situation. Your new policy is going to alert the lender that something has changed. Further, the name on the insurance is not going to read the same as the name on the loan. They hate that. Even if they wanted to look past this?.they are going to HATE the whole idea of the insurance being different than the loan. This is going to prompt a letter from the lender about your insurance?.perhaps stating that they expect new insurance, perhaps stating that they are going to put forced insurance on the property. Or perhaps it will trigger them to checking title, at which time they will see that the deed has been transferred, and will have to make a decision on whether to call the loan under the DOS.
If I were you I would do nothing right now. I would simply go about repairing the property as rapidly as possible, market the property, in short, move the direction you had planned on to begin with.
If you had planned to refi, then I would go ahead and start that now. But if you hadn?t planned to at this moment?don?t. It will be soon enough when you will hear something. It might be educational for you to play the game a little here?.it will be an excellent course for you that is coming free with your deal. Next time some one asks one of these DOS questions you?ll be an expert.
By the way, if you had planned to refi it immediately, I would have done it exactly as you did. Otherwise, I would have used a trust.
Re: Insurance cluster F#%! (Long) - Posted by ken in sc
Posted by ken in sc on February 19, 2001 at 15:21:06:
My attorney wanted to have that same type language in the deed. I convinced her not to at closing by letting her know that the seller KNEW what was going on. My attorney just explained to the seller what I had already explained about the loan still being in their name, violating DOS, etc. Then, she would do it like we (me and the seller) wanted. She just did not want to be a part of something where the seller did not understand and then get mad later. Once we did the first one, she got easier to deal with.
I leave the old insurance policy on. I have not had a claim on one of these yet, but if I did, I would let my agent talk to the underwriter. My agent also knows exactly what I am doing and would back me up - I hope!
Re: Insurance cluster F#%! (Long) - Posted by phil fernandez
Posted by phil fernandez on February 19, 2001 at 14:25:03:
Leon,
On a subject to, I think you are opening up a BIG can of worms if you alert the underlying mortgage holder. You have just violated the DOS clause and you are going to tell the mortgagee that you did. No need to do that. Find a better way.
Re: Insurance cluster F#%! (Long) - Posted by LeonNC
Posted by LeonNC on February 20, 2001 at 24:15:15:
Hi Jim,
Thanks for the words of wisdom. Not that it makes a difference but I did use a trust. I’ll go ahead and do the repairs and get it refied. The banker I’ve been talking to says he can do it in short order.
I’ve got to find an attorney who will listen to me better and understand what I’m trying to accomplish, althought NOW I think this guy understands because I told him he just put my head into the lions mouth.
i think you and your lawyer should be on the same sheet. sometimes they (lawyers) are a pain. You pay the lawyer to look out for your best interest so maybe he was protecting you.
good luck
i think you and your lawyer should be on the same sheet. sometimes they (lawyers) are a pain. You pay the lawyer to look out for your best interest so maybe he was protecting you.
good luck
Re: Insurance cluster F#%! (Long) - Posted by JPiper
Posted by JPiper on February 20, 2001 at 07:54:59:
OK…you’ve got me confused now. The property was deeded to a trust. But you say “you” got the insurance on “me”. I would have insured the trustee, the trust, and it’s beneficiaries as their interests may appear (depending on how the title reads).
This may well have been OK at the bank after some discussion…hard to say. What I wouldn’t have done is to insure it in my name. If you actually did that it may not be effectively insured now, since “you” are not the owner.
Re: Insurance cluster F#%! (Long) - Posted by LeonNC
Posted by LeonNC on February 24, 2001 at 02:03:40:
Jim,
Because the sellers insurance agency is the same as mine I was not able to keep the old policy in place and get my own. My insurance agent says they have to have my name on the policy somewhere. He recommended that I name myself as additional insured. I thought this sounded pretty good and was wondering if there’d be any harm in also adding the seller as additional insured hoping the lender sees it and decideds not to bother me?? I’ve got a limited power of attorney from the seller to deal with the property.